With climate finance deadlocked, global tax proposals rise again
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South Africa’s budget remains stuck as parties reject reduced VAT hike
revised budget presented by South Africa’s finance minister immediately rejected by major political parties. Biggest coalition partner says it won’t support budget. Treasury had initially proposed a 2-percentage-point hike to fund spending on health, transport and education. It revised that on Wednesday to a half-point increase this year followed by another one next year. The budget is the biggest test of the fractious coalition government, formed after the ANC lost its parliamentary majority for the first time since the end of apartheid in 1994. The deficit is now forecast at 4.6% of gross domestic product in 2025/26, and debt is forecast to hit 76.2% of GDP, while the VAT hike is expected to raise inflation.
Summary Treasury says spending pressures require VAT increase
Biggest coalition partner says it won’t support budget
Deadlock is biggest test yet for multi-party government
CAPE TOWN, March 12 (Reuters) – A revised budget presented on Wednesday by South Africa’s finance minister was immediately rejected by major political parties, even though a proposed increase in value-added tax was sharply reduced.
The revision was meant to end an impasse between Finance Minister Enoch Godongwana’s African National Congress and its biggest coalition partner, the Democratic Alliance, which rejected an initial proposal three weeks ago.
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But the disagreement left no clear path to approval of the budget.
The Treasury had initially proposed a 2-percentage-point hike to fund spending on health, transport and education. It revised that on Wednesday to a half-point hike this year followed by another one next year.
VAT is currently at 15%.
“The DA made it clear to the ANC … that we would not support any increase in taxes unless those increases were temporary,” DA leader John Steenhuisen in a statement.
The official opposition, uMkhonto we Sizwe, and the Economic Freedom Fighters also rejected the new budget – ruling out the small possibility that the ANC could turn to them for votes.
The budget is the biggest test of the fractious coalition government, formed after the ANC lost its parliamentary majority for the first time since the end of apartheid in 1994.
The ANC and the DA are ideologically opposed on many issues, yet have overcome occasional disputes to govern together so far.
But political analyst Busisiwe Seabe said the budget row “sets a precedent for what we should expect: continued deadlocks, protracted negotiations, and an overall difficulty in governing”.
Godongwana said “new and persistent” spending pressures required additional funding, and that raising VAT was the best answer.
In comments broadcast on Newzroom Afrika TV, President Cyril Ramaphosa said Godongwana had made the difficult choices, and now “parliament will have to … come up with solutions.”
Tax measures proposed in the latest budget would generate an additional 28 billion rand ($1.53 billion) in the fiscal year starting on April 1, Godongwana said, less than half the 58 billion the Treasury had initially hoped for.
The revised budget documents showed that additional funds would come from contingency reserves.
The deficit is now forecast at 4.6% of gross domestic product in 2025/26, and debt is forecast to hit 76.2% of GDP, while the VAT hike is expected to raise inflation. ($1 = 18.3462 rand)
Roelf reported from Cape Town and Gumbi and Anders from Pretoria; Additional reporting by Nqobile Dludla and Sfundo Parakozov in Pretoria; Writing by Nellie Peyton; Editing by Alexander Winning, Alexandra Hudson and Kevin Liffey
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Developing nations blast $300 billion COP29 climate deal as insufficient
Negotiations had been due to finish on Friday but ran into overtime as representatives from nearly 200 countries struggled to reach consensus. Some delegates gave the deal a standing ovation in the COP29 plenary hall. Others lambasted wealthy nations for not doing more and criticised the Azerbaijan host for hurriedly gavelling through the contentious plan. The agreement would provide $300 billion annually by 2035, boosting rich countries’ previous commitment to provide $100 billion per year in climate finance by 2020. It lays the groundwork for next year’s climate summit, to be held in the Amazon rainforest of Brazil, where countries are meant to map out the next decade of climate action. The deal encourages developing countries to make contributions but does not require them to make them, including the U.S., European nations and Canada. It also lays bare divisions between wealthy governments constrained by tight domestic budgets and developing nations reeling from costs of storms, floods and droughts. “It isn’t nearly enough, but it’s a start,” said Tina Stege, Marshall Islands climate envoy.
Developing nations slam the deal as insufficient
UN climate chief says impact depends on delivery
Trump has pledged to remove US from climate pact
BAKU, Nov 24 (Reuters) – Countries at the COP29 summit in Baku adopted a $300 billion a year global finance target on Sunday to help poorer nations cope with impacts of climate change, a deal its intended recipients criticised as woefully insufficient.
The agreement, clinched in overtime at the two-week conference in Azerbaijan’s capital, was meant to provide momentum for international efforts to curb global warming in a year destined to be the hottest on record.
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Some delegates gave the deal a standing ovation in the COP29 plenary hall. Others lambasted wealthy nations for not doing more and criticised the Azerbaijan host for hurriedly gavelling through the contentious plan.
“I regret to say that this document is nothing more than an optical illusion,” Indian delegation representative Chandni Raina told the closing session of the summit, minutes after the deal was gavelled in. “This, in our opinion, will not address the enormity of the challenge we all face. Therefore, we oppose the adoption of this document.”
United Nations climate chief Simon Stiell acknowledged the difficult negotiations that led to the agreement but hailed the outcome as an insurance policy for humanity against global warming.
“It has been a difficult journey, but we’ve delivered a deal,” Stiell said. “This deal will keep the clean energy boom growing and protect billions of lives.
“But like any insurance policy, it only works if the premiums are paid in full, and on time.”
The agreement would provide $300 billion annually by 2035, boosting rich countries’ previous commitment to provide $100 billion per year in climate finance by 2020. That earlier goal was met two years late, in 2022, and expires in 2025.
The deal also lays the groundwork for next year’s climate summit, to be held in the Amazon rainforest of Brazil, where countries are meant to map out the next decade of climate action.
The summit cut to the heart of the debate over financial responsibility of industrialised countries – whose historic use of fossil fuels has caused the bulk of greenhouse gas emissions – to compensate others for worsening damage from climate change.
It also laid bare divisions between wealthy governments constrained by tight domestic budgets and developing nations reeling from costs of storms, floods and droughts.
Negotiations had been due to finish on Friday but ran into overtime as representatives from nearly 200 countries struggled to reach consensus. Talks were interrupted on Saturday as some developing countries and island nations walked away in frustration.
“We are leaving with a small portion of the funding climate-vulnerable countries urgently need. It isn’t nearly enough, but it’s a start,” said Tina Stege, Marshall Islands climate envoy.
Nations have been seeking financing to deliver on the Paris Agreement goal of limiting global temperature rise to 1.5 degrees Celsius (2.7 degrees Fahrenheit) above pre-industrial levels – beyond which catastrophic climate impacts could occur.
The world is currently on track for as much as 3.1 C (5.6 F) of warming by the end of this century, according to the 2024 U.N. Emissions Gap report, with global greenhouse gas emissions and fossil fuels use continuing to rise.
Item 1 of 10 A screen displays Chandni Raina of India as she speaks during a closing plenary meeting at the COP29 United Nations Climate Change Conference, in Baku, Azerbaijan November 24, 2024. REUTERS/Maxim Shemetov [1/10] A screen displays Chandni Raina of India as she speaks during a closing plenary meeting at the COP29 United Nations Climate Change Conference, in Baku, Azerbaijan November 24, 2024. REUTERS/Maxim Shemetov Purchase Licensing Rights , opens new tab
Sunday’s deal failed to set out detailed steps for how countries will act on last year’s U.N. climate summit pledge to transition away from fossil fuels and triple renewable energy capacity this decade. Some negotiators said Saudi Arabia had attempted to block such a plan during the talks.
“There’s definitely a challenge in getting greater ambition when you’re negotiating with the Saudis,” said U.S. climate adviser John Podesta.
A Saudi official did not immediately provide comment.
WHAT COUNTS AS DEVELOPED NATION?
The roster of countries required to contribute – about two dozen industrialised countries, including the U.S., European nations and Canada – dates back to a list decided during U.N. climate talks in 1992.
European governments have demanded others pay in, including China, the world’s second-biggest economy, and oil-rich Gulf states. The deal encourages developing countries to make contributions but does not require them.
The agreement includes a broader goal of raising $1.3 trillion in climate finance annually by 2035 – which would include funding from all public and private sources and which economists say matches the sum needed to address global warming.
Countries also agreed on rules for a global market to buy and sell carbon credits that proponents say could mobilise billions more dollars into new projects to fight global warming, from reforestation to deployment of clean energy technologies.
Securing the climate finance deal was a challenge from the start.
Donald Trump’s U.S. presidential election victory this month has raised doubts among some negotiators that the world’s largest economy would pay into any climate finance goal agreed in Baku. Trump, a Republican who takes office in January, has called climate change a hoax and promised to again remove the U.S. from international climate cooperation.
President Joe Biden congratulated the COP29 participants for reaching what he called an historic agreement that would help mobilise needed funds, but said more work was needed.
“While there is still substantial work ahead of us to achieve our climate goals, today’s outcome puts us one significant step closer. On behalf of the American people and future generations, we must continue to accelerate our work to keep a cleaner, safer, healthier planet within our grasp,” Biden said in a statement.
Western governments have seen global warming slip down the list of national priorities amid surging geopolitical tensions, including Russia’s war in Ukraine and expanding conflict in the Middle East, and rising inflation.
The showdown over financing for developing countries comes in a year scientists predict will be the hottest on record. Climate woes are stacking up, with widespread flooding killing thousands across Africa, deadly landslides burying villages in Asia, and drought in South America shrinking rivers.
Developed countries have not been spared. Torrential rain triggered floods in Valencia, Spain, last month that left more than 200 dead, and the U.S. so far this year has registered 24 billion-dollar disasters – just four fewer than last year.
Reporting by Kate Abnett and Valerie Volcovici; Writing by William James and Richard Valdmanis; Editing by David Holmes, Alexander Smith, Frances Kerry and David Gregorio
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